British Gas owner Centrica (LON:CNA) warned energy price caps will impact its 2019 profits on Thursday, sending shares lower.
Centrica said adjusted operating profit was up 12% to £1,392 million in 2018, as a result of higher commodity prices and resilient rough gas production.
The firm said it had saved £248 million in-year efficiency savings across the year. It also announce a full year dividend per share of 12.0p.
Nevertheless, the energy provider warned on the effect of energy price caps upon 2019 revenues.
The UK’s energy regulator Ofgem enforced energy price caps came into action at the beginning of January.
Whilst Ofgem have suggested that the cap will save 11 million households on average £76 a year, energy providers such as British Gas have not welcomed the initiative.
Despite its recent introduction, Ofgem have since opted to raise he rate which suppliers are allowed to charge energy customers on default tariffs.
As a result, all the ‘big six’ energy suppliers, including British Gas, SSE (LON:SSE) and Scottish Power announced price hikes.
Iain Conn, Centrica Group Chief Executive commented on the results:
“Centrica’s financial performance in 2018 was mixed against a challenging external backdrop.”
He added: “Our 2019 financial performance will be impacted by the UK default tariff cap and continuing lower volumes in E&P and Nuclear, meaning our 2018-20 target range for average adjusted operating cash flow is under some pressure. ”
“We are taking actions to strengthen the company in 2019 and improve underlying performance in 2020, including driving cost efficiency hard and delivering further divestments, and as a result net debt levels remain underpinned.”
Centrica shares are currently down -11.88% as of 14:06PM (GMT).